Minneapolis Property Management Blog

Are You Ready To Invest In Alternate Markets?

Deb Newell - Tuesday, January 27, 2015

Considering real estate investment in Minneapolis? The Minneapolis, St. Paul rental markets are prime for investors on any scale. Here are just a few of the highlights that make these markets some of the most desirable when it comes to rental property investment.

Untapped alternate markets can be a gold mine for CAP rate

•Mass influx of out-of-state investors has not occurred in these markets, hence pricing is still very competitive
•Higher amounts of non-distressed and distressed inventory than what’s available today in main-stream markets
•Higher than average rent rates (MSP/STP averages 33% higher rent rate than the national average)
•Wider variety of property types(SFH, TH, Multi-units/brownstones) all with strong CAP rates

Recipe for Success!

•Each market is different…what works in 1 market may not work in another market
•Make sure you have a business plan in place for each market
•Partner with your Property Manager to validate your business plan
•Your business plan should include (but not limited to)

oNeighborhoods

oProperty types

oPrice ranges

oRehab expenses

oRent ranges

oCAP rate goals

oShort term/long term growth and exit strategies

Regulation? Not to worry!

•Consult with an expert Property Manager and leverage their expertise BEFORE writing a purchase agreement!
•Definitions and requirements for a sale transaction are not the same for renting out a property
•You need and expert to consult on the following:
•Seller disclosure statements
•Truth-in-housing requirements
•City/State housing regulations
•Tenant/Rental statutes
•HOA bi-laws
•Habitability code
•Rental licensing requirements by city
•Building/Property status (VBR, Cat. 2 etc)
•City assessments

Speed-to-Market

•Hire a Property Manager that can execute with speed while being compliant with city/state requirements
•Hire the wrong Property Manager and it can cost you time and more importantly money!
•Make sure your Property Manager has your best interest in mind. Pay attention to their fee structure….does it drive toward your success or theirs, or both?
•Hire a full-service Property Management Company!

oEveryone says they are full-service…make sure they really are!

oSpecial assessments on a property can be worked through and in some cases, negotiated or waived…..if you hire the right company to do it for you

oHire a Property Manager who is a Licensed GC. If you hire a 3rd party contractor to perform rehabs/ready-to-rent repairs, this will add time to the equation

•Make sure your Property Manager is connected and has established relationships